A fundamental question in cell biology is how compartmentalization of the nucleus contributes to the regulation of genome function and to gene expression. A central issue in this area is whether nuclear bodies (NBs) form as a consequence of ongoing nuclear functions, such as transcription or RNA processing, or whether they provide preformed sites in which specific processes occur. The long-term goal of this research proposal is to gain an understanding of how physical structures within the nucleus contribute to genome function. Specifically, we seek to uncover how gene expression and nuclear substructures mutually affect each other. The replication dependent histone genes represent an excellent model system to study the integration of nuclear organization with regulation of gene expression. Histone genes are clustered and are only expressed during S phase. They are closely linked to the histone locus body (HLB), a distinct NB, which in turn is often associated with another prominent NB, the Cajal body (CB). We are using the dynamic interplay between the histone loci and the HLB/CB as a model system to elucidate how nuclear bodies form, how they are positioned in the context of the genome and, most importantly, how they contribute to genome function. Since very little is known regarding the initial nucleation step required for a NB formation we will address this issue of whether coding and non-coding RNAs can act as a nucleator of NBs. We hypothesize that RNA act as a critical factor which serves to attract some of the freely diffusible key components of a NB and to provide a scaffold to recruit and accumulate additional NB building elements. In addition, using naturally occurring differentiation stem cell system we will study a question of whether the role of a NB is functionally important. To address these fundamental questions we have recently developed a unique experimental system in human cells which allows us to create nuclear bodies de novo by tethering of proteins and specific RNAs to chromatin. Using this system we have for the first time systematically probed the mechanisms involved in the biogenesis of a nuclear body and shown that CBs are formed de novo by self-organization. We will now extend these findings by identifying the fundamental molecular mechanisms of how nuclear structures form and how they contribute to gene expression. Specific Aims of this proposal are: (1) to characterize factors required in Cajal body formation and to characterize the functional importance of NBs in activation and expression of the replication-dependent histone gene loci. In addition, (2) to characterize the role of specific coding and non-coding RNAs in de novo formation of the HLB and other NBs, and (3) to determine the functional role of a NB in differentiation of human embryonic and adult stem cells.